A look at the day ahead in European and global markets

By Rae Wee, Correspondent

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Markets were in a dour mood on Friday, with Iran flaunting its grip over the Strait of Hormuz serving as a stark reminder that the war in the Middle East is far from over.

Iranian state television broadcast on Thursday a video of commandos in a speedboat storming a container ship, after the collapse of peace talks that Washington had hoped would reopen one of the world's most important shipping routes.

Then... just days after saying he would indefinitely extend what had been a two-week ceasefire with Tehran, U.S. President Donald Trump announced he had ordered the Navy to "shoot and kill" Iranian boats laying mines in the strait, and step up demining activity.

A screen capture from a video said to show the seizure of the container ships MSC Francesca and Epaminondas in the Strait of Hormuz, broadcasted on Iranian State TV, and released April 22, 2026, shows soldiers taking part in the operation. IRIB/Handout via REUTERS 

The war's now been going on for about eight weeks and the U.S. and Iran remain in deadlock.

Investors have swung between hope for an imminent end to the conflict and fear that it might not come soon at all, and oil prices continue to push past $100 a barrel while the Strait of Hormuz stays effectively shut.

While corporate earnings have so far held up reasonably well, the fragile situation in the Middle East and the oil price surge present risks, keeping executives on their toes.

UK retail sales data for March is due later in the day, which will provide a sense of the strength of consumer spending amid the war.

A survey released on Thursday showed British consumer morale slid this month to its lowest since October 2023, as households ramped up their expectations for price rises.

British manufacturers have also turned their most pessimistic since the start of the COVID-19 pandemic and a measure of expectations for inflation has surged.

Graphics are produced by Reuters

Elsewhere in markets, focus was on the yen as it remained a whisker away from the key 160 per dollar level widely seen as a trigger for intervention.

Japanese Finance Minister Satsuki Katayama renewed warnings of currency intervention on Friday, stressing "decisive action" in close coordination with the United States.

And in a show of the continued artificial intelligence frenzy, Chinese AI startup DeepSeek started previewing a major upgrade for its hit AI model on Friday.